Solution for Q 31 to 40 of Chapter 4 of Book 3 - Analysis of Financial Statements of T S Grewal Class 12 Accountancy 2026-27 are given below. The Chapter name is Ratio Analysis class 12. These Solutions are based on topics solvency ratios which includes debt to equity ratio , calculation of quick ratio, acid test ratio, finding quick assets from the given information in question, finding the value of inventories when current rato and quick ratio are given, current ratio and quick ratio, calculating working capital, current assets and current liabilities, analysing if any transactions results into increase or decrease in current ratios, finding the value of current assets from given information, finding the value of current liabilities from given information.
Working notes are given with each solution. These help in understanding the steps and are also important for board exams as marks are given for steps.
These solutions are also useful for CA Foundation, CS Foundation and CMA Foundation students. The solutions will be helpful for students as well as teachers teaching class 12 accounts.
Question 31
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Quick Ratio |
0.8:1 |
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We assume the ratio to be 8:10 |
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Each transaction will be assumed to be of Rs 1 |
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| (a) |
Journal Entry |
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Inventory (Loose Tools) A/c Dr.. |
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** not quick asset |
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To Cash |
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QA |
Reduce |
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Quick Ratio |
7 : 10 |
= |
0.7:1 |
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Quick Ratio |
Decline |
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| (b) |
Journal Entry |
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Prepaid Insurance A/c Dr.. |
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** not quick asset |
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To Cash |
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QA |
Reduce |
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Quick Ratio |
7 : 10 |
= |
0.7:1 |
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Quick Ratio |
Decline |
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| (c) |
Journal Entry |
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Sundry Debtors A/c Dr.. |
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QA |
Increase |
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To Inventories |
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** not quick asset |
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Quick Ratio |
9 : 10 |
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0.9:1 |
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Quick Ratio |
Improve |
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| (d) |
Journal Entry |
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Bills Payable A/c Dr.. |
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1 |
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CL |
Decrease |
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To Cash |
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1 |
QA |
Decrease |
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| Quick Ratio |
7 : 9 |
= |
0.78:1 |
| Quick Ratio |
Decrease |
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▶ Video Solution: Coming Soon
Question 32
| Step 1 |
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| Current Liabilities |
= |
Total Liabilities |
- |
Capital Employed |
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| Total Liabilities |
= |
Current Liabilities |
+ |
Capital Employed |
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200000 |
+ |
2000000 |
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= |
2200000 |
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| Step 2 |
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| Total Assets |
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Total Liabilities |
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2200000 |
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| Step 3 |
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| Current Assets |
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Total Assets |
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Fixed Assets |
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2200000 |
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1400000 |
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= |
800000 |
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| Step 4 |
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| Current Ratio |
= |
Current Assets |
/ |
Current Liabilities |
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800000 |
/ |
200000 |
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= |
4:1 |
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▶ Video Solution: Coming Soon
Question 33
| Step 1 |
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| Inventory |
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Current Assets |
- |
Quick Assets |
| So |
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| Current Assets |
= |
Quick Assets |
+ |
Inventory |
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1200000 |
+ |
300000 |
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= |
1500000 |
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| Step 2 |
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| Quick Ratio |
= |
Quick Assets |
/ |
Current Liabilities |
| 2 |
= |
1200000 |
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CL |
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| Current Liabilities |
= |
Quick Assets |
/ |
Quick Ratio |
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1200000 |
/ |
2 |
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= |
600000 |
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| Step 3 |
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| Current Ratio |
= |
Current Assets |
/ |
Current Liabilities |
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1500000 |
/ |
600000 |
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= |
2.5:1 |
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▶ Video Solution: Coming Soon
Question 34
| Step 1 |
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| Current Assets |
= |
Total Assets |
- |
Fixed Assets |
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1100000 |
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500000 |
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= |
600000 |
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| Step 2 |
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| Total Liabilities |
= |
Total Assets |
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= |
1100000 |
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| Step 3 |
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| Current Liabilities |
= |
Total Liabilities |
- |
Capital Employed |
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1100000 |
- |
1000000 |
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= |
100000 |
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| Step 4 |
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| Current Ratio |
= |
Current Assets |
/ |
Current Liabilities |
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600000 |
/ |
100000 |
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= |
6:1 |
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| Note : Capital Employed includes shareholder Funds and Long term debts |
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▶ Video Solution: Coming Soon
Question 35
| Step 1 |
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| Current Assets |
= |
Total |
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Fixed |
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Non Current |
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Long term |
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Assets |
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Assets |
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Investments |
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Loans & Advances |
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1600000 |
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600000 |
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100000 |
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100000 |
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= |
800000 |
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| Step 2 |
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| Current liabilities |
= |
Total Debts |
- |
Long Term Borrowings |
- |
Long Term |
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Provisions |
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1200000 |
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400000 |
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400000 |
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= |
400000 |
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| Step 3 |
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| Current Ratio |
= |
Current Assets |
/ |
Current Liabilities |
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800000 |
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/ |
400000 |
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= |
2:1 |
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| Step 4 |
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| Quick Assets |
= |
Current Assets |
- |
Inventories |
- |
Prepaid expenses |
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800000 |
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190000 |
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10000 |
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= |
600000 |
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| Step 5 |
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| Quick Ratio |
= |
Quick Assets |
/ |
Current Liabilities |
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600000 |
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/ |
400000 |
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= |
1.5:1 |
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▶ Video Solution: Coming Soon
Question 36
| Step 1 |
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| Current Ratio |
= |
Current Assets |
/ |
Current Liabilities |
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100000 |
/ |
20000 |
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= |
5:1 |
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| Step 2 |
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| Quick Ratio |
= |
Quick Assets |
/ |
Current Liabilities |
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50000 |
/ |
20000 |
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= |
2.5:1 |
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▶ Video Solution: Coming Soon
Question 37
| Step 1 |
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| Total Liabilities |
= |
Total Assets |
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= |
260000 |
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| Step 2 |
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| Equity |
= |
Total Liabilities |
- |
Total Debts |
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260000 |
- |
180000 |
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= |
80000 |
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| Step 3 |
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| Debt |
= |
Total Debts |
- |
Current Liabilities |
| (Long Term) |
180000 |
- |
20000 |
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= |
160000 |
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| Step 3 |
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| Debt to |
= |
Debt |
/ |
Equity |
| Equity Ratio |
160000 |
/ |
80000 |
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= |
2:1 |
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▶ Video Solution: Coming Soon
Question 38
| Step 1 |
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| Equity |
= |
Share Capital |
+ |
General Reserves |
+ |
Accumulated Profits |
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500000 |
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+ |
90000 |
+ |
50000 |
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= |
640000 |
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| Step 2 |
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| Debt |
= |
Debentures |
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130000 |
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| Step 3 |
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| Debt to |
= |
Debt |
/ |
Equity |
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| Equity Ratio |
130000 |
/ |
640000 |
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= |
0.203:1 |
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▶ Video Solution: Coming Soon
Question 39
| Step 1 |
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| Equity |
= |
Share Capital |
+ |
General Reserves |
+ |
Accumulated Profits |
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300000 |
+ |
90000 |
+ |
40000 |
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= |
430000 |
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| Step 2 |
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| Debt |
= |
Debentures |
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150000 |
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| Step 3 |
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| Debt to |
= |
Debt |
/ |
Equity |
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| Equity Ratio |
150000 |
/ |
430000 |
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= |
0.35:1 |
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▶ Video Solution: Coming Soon
Question 40
| Long Term |
= |
Total |
- |
Current |
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| Debts |
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Debts |
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Liabilities |
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= |
600000 |
- |
200000 |
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= |
400000 |
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| Equity |
= |
Capital |
- |
Long term |
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Employed |
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Debts |
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= |
600000 |
- |
400000 |
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= |
200000 |
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| Debt to |
= |
Debt |
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/ |
Equity |
| Equity Ratio |
400000 |
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/ |
200000 |
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= |
2:1 |
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▶ Video Solution: Coming Soon
